scorecardresearchHow do you spot personal loan scams? Here are 4 signs

How do you spot personal loan scams? Here are 4 signs

Updated: 17 May 2023, 01:39 PM IST
TL;DR.

Spotting a loan fraud is not difficult, especially if you take note of evident red flags like guaranteed loan approval to zero credit checks at the time of loan application.

Falling prey to personal loan scams

Falling prey to personal loan scams

There may be so many reasons for which one may seek a loan. Many people borrow to solve their financial problems without realizing how succumbing to loan scams will only exacerbate their need for money. Many inclined borrowers are not aware of the loan application and approval process, leaving them to think that quick loan approval is the hallmark of a good lending company.

Without checking on the interest rates and terms and conditions (shared in fine print), vulnerable borrowers tend to sign on the dotted line without reading the details of the loan agreement. This tendency to ignore the possibility of being scammed into taking high-interest loans has made loan repayment hard for many borrowers.

Thousands and lakhs of people are scammed of their hard-earned money as they apply for personal loans online. Knowing whether the lending company is legitimate and registered with respective authorities can save you from being a victim of loan fraud.

Certain tell-tale signs underline when you must be careful while looking to borrow online. These include:

Demanding advance fee

There is no way you should be willing to pay to get a loan. This is one of the most popular loan scams wherein the scamster demands a fee to approve the loan application process. Any organization that demands a fee upfront to dole out a loan is likely a fraudulent one and must be reported against.

All loans guaranteed

There is nothing called a guaranteed loan. Any organization that ignores factors like credit score or the borrowers’ credentials like income, loan history, etc., and guarantees loan approval to every other borrower is more likely to defraud the borrowers of their money under the guise of high-interest rates.

Insecure websites

Check whether the site has “s” suffixing “HTTP”. If not, then be warned against surfing such sites. The lack of “s” highlights the chances of a scam and the possibility of the site being fake. If you still continue to seek a loan from such a site, chances are that hackers would break into your personal information including your bank account number and password.

Time-bound offers

Avoid companies announcing “loan offers” such as “limited time offer” or “special discounts” on seeking a loan within a limited period. The tendency to force loan offers by luring people with the instant availability of the desired amount must be ignored. Bank and lending organizations offer loans based on borrowers’ credit history. Borrowers must not succumb to the unwarranted sense of urgency that fraudulent lenders create.

It is not possible to verify the antecedents of any lending company in today’s times. There is an utmost need to check details like if the lending company is registered with relevant organizations. Better, if you borrow from a reputed financial institution. The interest rates charged may be high and the loan application arduous. However, that must not deter you from seeking loans from approved organizations.

 

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First Published: 16 May 2023, 11:51 AM IST